Saturday, December 15, 2007

Venezuelan Price Controls in Danger

The Financial Times reports that shortages of basic goods and the annual rate of inflation that is "more than 20 per cent" have led the Venezuelan government to begin to lift price controls:

On Monday the government took its first step towards attacking widespread shortages by lifting price controls on long-life milk, one of several goods regularly unavailable in shops, leading to long queues and discontent.

There is speculation controls may also be removed from other scarce goods such as sugar, eggs, black beans, chicken and red meat. (Benedict Mander, "More Venezuela Price Caps May Go," 12 December 2007)

Venezuela, which, unlike Iran, has never had a Jacobin revolution (thus leaving all strata of the ruling classes more or less intact) and where the recent defeat of the Constitutional Reform makes the prospect of the Bolivarian process (an evolutionary approach that is perceived as a "kinder, gentler" alternative to a Jacobin revolution) much less certain than before, has a weaker politico-economic foundation for populism than Iran, though inflation leads neoliberals to put the same pressures on price controls, government subsidies, state-mandated wage increases, and other measures that "distort the market" in Iran, too.

Is there a way to curb inflation without resorting to market discipline? Martin Hart-Landsberg suggests that there may be one, taking inspiration from the experience of popular participation in price control implemented by the the Office of Price Administration of the United States government in the early 1940s: "Another World Is Indeed Possible" (MRZine, 7 November 2007). I am not certain if the measures described in this article can be applied in Iran or Venezuela, but they ought to be considered by the governments of both nations.